RMIT University GAS Conference in Melbourne Australia 2018

Entrepreneurial Action: Effectuation within the Good-Faith-Learning Social Enterprise

 

 

Abstract

The literature has largely focused on bricolage theory to explain social entrepreneurial actions. Following the effectuation theory of entrepreneurship, we argue that entrepreneurs start businesses based on available means and not only by creative reinvention and a pre-determined goal. This in-depth case study investigated how effectuation principles guide entrepreneurial actions in a social enterprise setting. The results demonstrated that the entrepreneurial actions of the pre-emergence stage are largely based on the actual means available to the entrepreneur and the founding entrepreneur’s lived experience and expertise. In this case study, the featured social entrepreneur utilises storytelling to connect with other stakeholders in the realisation of enterprising activity. Results further identified that the entrepreneurial actions are reflected upon the flexibility, experimentation and affordable loss dimensions of effectuation theory. By applying effectuation theory to explain social entrepreneurial behaviour, our study expands the boundaries of the theory and enriches understanding of effectual approaches in social enterprise settings. The study findings suggest that future researchers should consider the application of mainstream entrepreneurship theories to explain entrepreneurial action within social settings.

 

 

Introduction

Social enterprises provide a key vehicle in conducting innovation that addresses social challenges (Borzaga &  Bodini, 2014). Social enterprises are hybrid organisations with a dual mission of achieving social goals while financially being sustainable (Doherty,  Haugh &  Lyon, 2014). Along with the increased attention and significance, the extant literature recognises social entrepreneurship as an entrepreneurial activity with a social mission and an intention (Johnson, 2000) driving the related activities in an innovative and creative manner (Nicholls, 2006). Along with the significance and interest in the field, scholars have started to investigate how, and why, social enterprising occurs (e.g. Borzaga &  Defourny, 2004; Kerlin, 2010; Lumpkin, Moss, Gras, Kato & Amezcua, 2013). In addition, the recent social enterprise literature has focused on ethical commitments informing entrepreneurial actions (Bull &  Ridley-Duff, 2018), and government policies for promoting social entrepreneurial actions (Chavez, Stinnett, Tierney & Walsh, 2017; Wu,  Zhuo &  Wu, 2017). Yet, our understanding about actual entrepreneurial actions within social enterprises in their emergence stage is highly limited.

 

Therefore, the aim of this study is to address the question “how effectuation determines entrepreneurial action in the emergence of the Good-Faith Learning social enterprise?” The literature shows that the origin of a social enterprise is closely associated with the social entrepreneur phenomenon (Lehner, 2011) and that the social entrepreneur’s background shapes opportunity recognition when engaging in social enterprising activity (Dorado, 2006; Mair &  Noboa, 2006; Robinson, 2006). Therefore, building on Sarasvathy (2001) work, this study argues that the emergence of entrepreneurial action may rest upon the means available to the entrepreneur. In addition, to this, the assessment of the affordable loss and the exploitation of the available relationships rather following a pre-determined opportunity and a goal stressed by the traditional theory of entrepreneurship play a role. Sarasvathy’s (2001) effectuation logic provides a promising theoretical perspective to explain the entrepreneurial action at the outset of a social enterprise (Akemu,  Whiteman &  Kennedy, 2016; Fisher, 2012) and innovation strategy in new ventures (Guo, 2018). By investigating entrepreneurial actions of pre-launch stage of Good-Faith Learning social enterprise in an effectuation perspective, this study extends effectuation theory into an overlooked field of the social enterprise context. This is significant given the disproportionate focus on bricolage perspective in social entrepreneurship (e.g. Di Domenico,  Haugh &  Tracey, 2010; Sunley &  Pinch, 2012) leaving effectuation approach to social enterprising a neglected field (Akemu et al., 2016, p. 849). By studying the interface between social enterprise and entrepreneurship, we expand the boundaries of entrepreneurship theories to enrich our understanding about the entrepreneurial behaviour in the social enterprise context.

 

The remainder of the paper proceeds as follows. Firstly, a theoretical explanation about social enterprises and effectuation theory is explained. Secondly, the methodological approach of the study is reported. Thirdly, analysis and the discussion of the findings is conducted. Finally, conclusions are made along with the practical and research implications.

 

 

Theoretical background

Social enterprise

Social enterprise is defined as a business with a dual mission of achieving both financial sustainability and social purpose (Doherty et al., 2014). These social mission driven businesses operate in markets  (Kerlin, 2006) by engaging in economic and trading activities to fulfil the mission (Lorenz &  Kay, 2010). They often rely upon  volunteers to serve key functions (Austin,  Stevenson &  Wei-Skillern, 2006). There are multiple purposes of social enterprises; social and labour integration; providing support services to marginalised groups;  increasing the human or social capital within the communities; and provision of goods, services and advocacy (Burcea, 2014). Assets and wealth of these entities are used to create community benefits and this mission is facilitated by trading in a market place at least partially (Thompson &  Doherty, 2006). Thus, social enterprises tend to reflect on a dual mission (Doherty et al., 2014).

 

There are various theories to rationalise the entrepreneurial action in entrepreneurship and causation, effectuation and bricolage are three main of those theoretical perspectives.  The traditional entrepreneurship explanation about how entrepreneurs taking action of entrepreneurial behaviour rests on the fact of identifying an opportunity and evaluating the opportunity to exploit (Shane &  Venkataraman, 2000). Causation in entrepreneurship follows that entrepreneurial actions start with a predetermined goal and the entrepreneur tries to identify the means of achieving it (Sarasvathy, 2001).

In contrast, bricolage perspective believes in “making do with what is at hand” (Lévi-Strauss cited in Fisher, 2012). It is the process whereby bricoleurs ascertain  resources and recombine them in new manner to address problems and respond to opportunities (Di Domenico et al., 2010). Alternatively, Sarasvathy (2001) argues that entrepreneurs start with who he is, what he knows and whom he knows and begin acting upon whatever he can afford to do so. Although the social enterprise literature has focused on stakeholder support and collective action (Corner &  Ho, 2010), motivations (Omorede, 2014), opportunity discovery vs. formation (Korsgaard, 2011) to clarify social enterprise emergence, there is scant literature addressing effectuation in the context of social enterprise emergence. The following section outlines the key principles of effectuation logic to explain the entrepreneurial action.

 

Effectuation Principles

“Effectuation is a process in which a set of means is taken as given, and the entrepreneur focuses on selecting between possible effects that can be created with set of means” (Fisher, 2012, p. 1030). The effectuation approach of entrepreneurial behaviour is exhibited in Figure 1 which fundamentally guides this study.

 

 

According to Figure 1, Sarasvathy’s (2001) effectuation logic is based on a few key principles: (1) starting with means; (2) applying affordable loss; (3) leveraging relationships; and (4) exploiting. The first principle of starting with means explains the way entrepreneurs make decisions based on the resources at their disposal. So, effectual entrepreneurs start developing opportunities based on their identify, knowledge and networks. They do assess the risk based on affordable loss and believe in building relationships among the stakeholders. Further, they make use of the unexpected contingencies to shape the emerging enterprise and take actions to control the future of the business. The traditional entrepreneurship theory is based on the idea that entrepreneurs start following a specific goal, assess risk based on expected return, analyse the competitive scope, try to reduce the contingencies and predicts an uncertain future (Sarasvathy, 2001; Shane &  Venkataraman, 2000). Thus, effectual entrepreneurs allow the goals to emerge through the means and the activities they engage in. This approach gives rise to an ongoing exploration to spot an opportunity to pursue and thereby to identify new means, goals and markets. Starting with the identity, knowledge and networks allows the entrepreneur to decide on what they can do. Further, engagement with stakeholders provides the entrepreneur with an opportunity to identify new approaches and revalue what the entrepreneur has already got (Sarasvathy &  Dew, 2005).

 

Methodology

This case study adopted a qualitative research design (Yin, 2013). Specifically, we adopt a single case study approach to gain in-depth access to the multifaceted social data and to identify the idiosyncratic nuances (Mitchell, 1983) and the dynamic presence (Eisenhardt, 1989, p. 524) within Good-faith Learning social enterprise as this method is a powerful example (Siggelkow, 2007) and well describes the existence of a phenomenon (Eisenhardt &  Graebner, 2007). Case study approach has widely been used in social enterprise research (e.g. Maibom &  Smith, 2016; Smith &  Woods, 2015). The social enterprise literature explaining entrepreneurial behaviour is limited and therefore, the case study approach is the most appropriate tool to explore key variables and relationships at the very early phase of a new management theory (Eisenhardt, 1989; Yin, 1994). Good Faith-Learning is an online school targeting at educating people in a resource and financially accessible manner. We carried out the case study in collaboration with the social enterprise’s founding entrepreneur, Byron Gales  (Gibbert,  Ruigrok &  Wicki, 2008) who provided the data for the case study by explaining his entrepreneurial journey.

 

In assuring the rigor in case study research, we report on the way we ensure validity and reliability in this study based on Gibbert et al. (2008) work. To ensure internal validity, empirical patterns from Good-Faith Learning case data are compared with predicted and established patterns identified in the literature. We use a part of the methodology adopted in Fisher (2012) where the theoretical constructs to compare the case data patterns have been obtained from Chandler, DeTienne, McKelvie and Mumford (2011) and Sarasvathy (2001). Hence, following Fisher (2012, p. 1030), the following theoretical constructs are examined in the Good-Faith Learning social enterprise to explain the effectuation principles.

 

Experimentation: entrepreneurs may develop multiple variations of a product or service to arrive at a commercial offering by way of creating multiple different prototypes and delivering different services in the process of finding an offering. They may also experiment with different ways to sell and/or deliver a product or service such as using different distribution channels and different revenue models. Doing so, they change the product or service substantially as the venture develops.

 

Affordable loss: Expert entrepreneurs commit only limited amounts of resources to the venture at a time. They seek out ways of doing things in inexpensive ways. Limiting the resources committed to the venture in to what could be lost is one of the main characteristics of them. Therefore, they develop product or service using only personal resources.

 

Flexibility: Entrepreneurs respond to unplanned opportunities as they arise by rapidly changing the offering or revenue model of the venture as new opportunities arise. They adapt what they are doing to the resources on hand and focus on what is readily available when deciding on a course of action. Another way to reflect on flexibility is to avoid courses of action that restrict flexibility and adaptability by consciously rejecting courses of action that will lock them in (relationships or investments).

 

Pre-commitments: expert entrepreneurs enter into agreements with customers, suppliers, and other organizations and negotiate with other parties prior to having a fully developed product or service. These theoretical constructs are examined in conjunction with the key stages in the Figure 1.

 

Construct validity is the extent to which a study investigates what it claims to investigate, that is, to the extent to which a procedure leads to an accurate observation of reality (Denzin and Lincoln, 1994). This is ensured by clarifying the way behind the rationale of the study and the approach carried out in arriving at the conclusions (Yin, 1994: 102). Therefore, given the study rationale explained at the outset of the paper, this study is first based on a literature review of effectuation and social enterprise. The theoretical constructs derived from the literature are then compared with Good-Faith Learning founder’s imaginative story and the experiences. Based on these the effectuation process flow of Sarasvathy (2001) is developed and arrived at conclusions. In relation to the generalisation of research findings, analytical generalisation is assured in this study (Yin, 1994). Therefore, generalisations are made from empirical observations to theory (Yin, 1999). The reliability of the study is assured by a disclosure of the case study organisation – Good-Faith Learning, instead of keeping it anonymous (Gibbert et al., 2008, p. 1467). The analysis is performed by matching the theoretical dimensions of effectuation logic mentioned previously with case study data.

 

Analysis

 

Emergence of Good-Faith Learning Social Enterprise

The concept of Good-Faith Learning originated in Byron’s mind when he met people on social media (i.e. Face Book). Whilst he was networking through the social media, Byron met a friend from the Philippines, who had the same family name as him, Gale. Thus, Byron was interested in being connected to the Filipinos and Cambodians who had the same family name. Many of his Gale-friends were domestic workers in the Middle East and Byron could gain a good understanding about these friends’ poor earnings. During a social media chat with one of the ladies from Gale-friends, who was working in Saudi Arabia, Byron asked whether she was interested to start her own business. Given her interest in starting up her own business, Byron started a Web Blog where he added the business-related content so that she could read it. He noted that “this could be for anybody; what matters is not the subject but the application”. An idea which was in his mind nearly for 20 years was suddenly triggered in his mind as currently, people have the access to internet and smartphones. The Good-Faith Learning online school is accessible where ever the person resides in the world and is affordable for the lower socio-economically masses looking for its service. The rationale behind Good-Faith Learning was explained by founding entrepreneur Byron, as follows:

“Imagine a woman, we will call X who is a single mother with three children, living in poverty …. In the Philippines. The only work she can get pays $4.00 per day. This is not a lot of money to pay for education, food, clothes, rent and bills to support herself and her three children …. She cannot get ahead on only $4.00 a day. She has decided to improve her life. She wants a better life for herself and her children. She will work hard, and she just wants an opportunity… Good Faith learning is going to educate therefore free millions of people world-wide”

 

The lessons can be accessed from a smart phone and the cost of a lesson is AUD$1. Good-faith learning offers the students with a customised education to improve their lives.

 

Good-Faith Learning entrepreneur

As figure 1 presented, effectual entrepreneurs start ventures with actual means: identity, knowledge and expertise and social networks. Byron, the founding entrepreneur of the Good-Faith Learning social enterprise, is a highly experienced Australian professional and a businessman. Like many other successful entrepreneurs (e.g. Richard Branson), Byron left the school at 15 years old and started an apprenticeship as a fitter and turner at the Warrnambool base hospital. He finished the apprenticeship at 19 years and travelled around Australia for 6 years working at as a fitter and turner. At age of 25 he changed career direction and obtained a job as a delivery driver in pizza store in Brisbane. His mission in Good-Faith Learning seems to be built on the “actual means” (see Figure 1) identified in the effectuation logic. His traits, abilities and attributes which form the identity – “who I am” (see Figure 1), of Byron reflect on the social mission and the whole approach of Good-Faith Learning. This is indicated by the following quote.

“… given the chance or opportunity, I can learn how to do new types of jobs and occupations from fitter and turner to pizza stores and various other jobs in between. If I can do this so can others. All they need is the opportunity …I have trained many people …. who did not understand how smart they were until I gave them the opportunity to do something that they had never done before. Good Faith Learning is about giving people like me an opportunity to grow and to learn”

 

 

In addition, the central approach and the service delivered by Good-Faith Learning is largely underpinned by Byron’s knowledge, experience and expertise – “what I know” (see Figure 1). Basically, his life story has been fundamental in forming and developing this social enterprise. This is further indicated by the following quote.

 

“… it was the opportunity to learn that mattered … I learnt I could start in just about any industry at the bottom and work my way up learning as I go … I learnt all I needed was the basic skills in that industry to obtain my first paid job in that industry after starting I had secure income to learn more …”

 

After some time from being a pizza delivery driver, he was offered the store manager position although he had never been in-charge of people or business before. He was successful and pizza takings went up to $3000 from $1500 per week. Due to personal circumstance, Byron moved to Melbourne and obtained a position as a pizza maker at Pinkys Pizzas. Again, Byron was made Manager and he could increase the takings in the business from $10,000 to $12,000 in six months. In 1989, he left Pinkys Pizzas and started his own Pizza restaurant from taking over another business. It was a massive success and Pinkys Pizzas which had 50 franchise stores in Victoria, invited Byron again offering him the State Manager position. Byron accepted the offer and opened 18 more stores, trained everyone in the business including the managers in every aspect of the business. At Pinkys, Byron started using computers (he was 28 years old) and got selected to Monash University to follow Executive Business Management. He then started work in an office on computers first at Telsatra and then Mayne Group Finance where he learnt SAP and Excel. While he was working there he wanted to develop a Webpage for his current business and he employed someone to create a Webpage for him but they didn’t complete it. Byron requested the password for the Webpage and saw that it was hosted on Word Press. Within a day, Byron learnt how to create a Webpage on Word Press by himself and built Coastaldecksandfences.com. Given this background, Byron believes that “education is freedom … freedom is education”. This has been a motto of Good-Faith Learning social enterprise. Good-Faith Learning educates people who do not have a job to earn a living or who have poorly paid jobs, by sourcing the needed training and life coaching through an online presence. As to Byron;

 

“… if a person has access to a smart phone … It is possible to get information to them. That information could be educational … You can teach people around the world just by owning a smart phone…”

 

Good-Faith Learning has five different topic areas which they address: (1) small business-starting, developing, managing and growing; (2) webpage design and building; (3) accounting; (4) orphanage support and (5) free school supplies to families who are struggling. All the lessons are sent electronically to those who get the service from Good-Faith Learning. Byron expects to send the lessons to teachers in orphanages and some other schools in disadvantaged areas in addition to school supplies such as pens, pencils, books and school bags. It is clear that the fundamental concept and values underpinning the approach of the social enterprise are largely aligned with Byron’s lived experiences, his learnings and consequently his expertice. Effectual entrepreneurs generally use their own resources to create a start-up enterprise. By so doing they try to limit the resources invested in the venture into the amount they are ready to lose. Bryon’s strategy reflects upon this affordable loss principle and the following quote supports this.

“almost all of the funding has come from my own resources …… this is ok it has been included in my strategy…” 

 

Expert entrepreneurs interact with other people to obtain stakeholder commitments for the effectual actions. By interacting with others they try to identify new means and set new goals with a focus of evaluating their current approaches (Sarasvathy &  Dew, 2005). To build a solid interaction among the stakeholders, Byron uses social media regularly. Every morning he posts several pictures of happy faces and actions and shares positive thinking quotes on social media. By so doing he expects to build a strong group of people with a solid understanding about the nature and the goals of Good-Faith Learning social enterprise. This action reflects on “story telling” by entrepreneurs. Byron infuses his imagination of the outcomes of the social enterprise into a material artefact in this story telling process and it is a characteristic observed in his style throughout the discussion about the social enterprise. This is clearly visible in the following quote.

 

“When you give someone an opportunity to improve their lives … and they do …not only does their lives improve …… It could make a difference to three generations of their families or more …. Their children could feel the benefit and their grandchildren. They will use their new skills to work more productive in the community… and support others in their community …. Fixing motorbikes… accountancy… whatever they learn they will use”

It was observed that from the social mission to the final development of the services offered to the targeted audience are based on the entrepreneur’s imagination and beliefs. This was further observed in his belief of the mechanism used to educate people as follows.

 

“If a person has access to a smart phone … It is possible to get information to them. That information could be educational …You can teach people around the world just by owning a smart phone ….”

 

It is apparent that his approach to risk assessment builds on affordable loss element where the entrepreneur develops the product or service using only personal resources. In relation to Good-Faith Learning, usage of own funds to finance the social enterprise at the outset seems to be a strategy to build a goodwill and a brand name for the organisation. Byron uses his own funds to provide school supplies to children in the Philippines to carry a message about his social enterprise’s mission. In addition, his approach represents the characteristic of flexibility which is a distinguishing feature of effectuation based entrepreneurial action. Expert entrepreneurs tend to focus on what is available when they are deciding on a certain action. The following quote resembles on this criterion and indicates how Byron follows this principle to build the brand name for Good-Faith Learning.

“… after we did the first hand out of the school supplies …we had offers of donations to assist on the second and third programs of free school supplies … the plan is to continue this program … the positive response it creates to …Good Faith Learning … will continue to grow the brand name …Good Faith Learning will become stronger…”

 

This quote explains how such a flexible approach has generated more resource commitments from other parties. Rather acquiring firm resource commitments, Byron tend to use volunteering commitments to build his organisation. This action partly resembles upon the criterion of “pre-commitments”. The consequences of such action are further clarified by the following quote.

“I am also starting to get volunteers … people who would like to join us … at the present we need to go slow …and pick the right people to help us …at the present it is extremely important that we only include …. very good people in the team …very good at what they do … most volunteer people … I am asking for them please to be patient …”

 

Given the social mission targeted by Good-Faith Learning, Byron seems to be very careful of selecting the team for his business. It is apparent that he belives in utilising strong and trused relationships to realise the business activities. This reflects “whom I know” principle of effectuation. The following quote clarifies the rationale behind deploying strong and trusted relationships to execute social mission.

Moreover, Good-Faith Learning’s strategies to expand the target market have been built surrounding the flexibility dimension. Certificates are issued to the students after completing each set of ten lessons to acknowledge what they have been studying. While students are progressing, they can introduce five new students to this school and mentor them. Such advancement in their progression would be recognised by issuing another certificate to confirm the achievement by the old student. If the five students reach the diploma level, the mentor student will automatically get a Diploma in Staff Management. This seems to be a strategy of expanding the target market while motivating the students to progress.

Flexibility and the experimentation go together, apparently. The experimental nature of Byron’s approach to acquire a team for the business is reflected in the above quote. They may do changes to the products and the revenue model time to time and some possible clues of Byron’s approach is reflected in the following quote.

“Later when it comes to our education programs …teaching people, we will be readily accepted as a trustworthy caring organisation …because of the good will we have created … many people will join with us … to build a better future for themselves […] that is when the organisation will become self-funded … as I have mentioned before … Good Faith Learning will be self-funded … it will create its own funding” 

 

Currently, Good-Faith Learning has made available the buy-in cost of this online school to AUD$1 per lesson. This can be reduced to AUD$0.25 per lesson subject to reasonable grounds. So, the student can pay the balance later when the student has obtained enough left-over income after the costs of living cost.

 

The discussions with Byron showed that he uses “stories” as a strong marketing approach to consolidate his social enterprise in the market. This reflects how entrepreneurs use their own skills and imagination to create a lasting memory of their entrepreneurial journey and thereby to attract more resources and customers to the business. Byron clarified the rationale behind his use of stories to take the message of Good-Faith Learning forward as follows.

 

“…the use of the story is for the emotional aspect …to get a who I tell the story to … to feel personally involved …. to create an emotional response, to make them feel, to paint a picture in the persons mind. This has more powerful impact … and the best results. I try to get people to think with their heart as well as their mind with both sides of their mind, the logical and the emotional …”

 

To conclude the analysis, all the four key theoretical dimensions identified in section 3 and the actual means, what can I do, interact with other people in figure 1 could be observed in relation Good-Faith Learning social enterprise’s entrepreneurial action. Effectual stakeholder commitment, new means, new goals and constraints transformations could not be observed in the data.

 

 

Discussion

This unique case study set out to analyse how effectuation determines the entrepreneurial actions of the Good-Faith Learning social enterprise. The results demonstrated that the logic behind Byron’s entrepreneurial action is partially reflected in effectuation principles in terms of the following four main aspects: (1) the pre-emergence of the social enterprise actions are largely based on the actual means available to the entrepreneur; (2) the social mission and the rationale of enterprising are mainly based on the founding entrepreneur’s life experiences and expertise; (3) the entrepreneurial actions are largely a reflection of the founding entrepreneur’s lived experience and expertise; and (4) flexibility, experimentation and affordable loss dimensions were embedded in the actions of the Good-Faith Learning social enterprise.  The significant findings contribute to the social enterprise and entrepreneurship literature and are highlighted below.

 

This study extends the effectuation theory to an overlooked context – the social enterprise setting. The recent social enterprise literature investigates about various managerial facets of social enterprises, for instance the social enterprise business model (e.g. Cooney, 2011; Wilson &  Post, 2013); governance (e.g. Ebrahim,  Battilana &  Mair, 2014; Mair,  Mayer &  Lutz, 2015); strategy and performance management (e.g. Battilana, Sengul, Pache & Model, 2015; Liu &  Ko, 2012; Lyon &  Fernandez, 2012; Pache &  Santos, 2013) and paradoxical tensions (e.g. Smith, Besharov, Wessels & Chertok, 2012; Teasdale, 2012). Yet, the literature addressing actions during the pre-emergence of social enterprise is limited and much of the literature has focused instead on bricolage theory.

 

Further, the effectual approach to entrepreneurship in social entrepreneurship literature is implicit (Thompson, 2002). Our study demonstrates the applicability of effectuation principles to explain social entrepreneurial actions during the pre-emergence of a venture. Specifically, the results uncover that entrepreneurial actions start with available means and are a self-reflection of the entrepreneur’s rich lived life experiences and expertise. Means are idiosyncratic to the entrepreneur and encompass their skills, resources, and people who could help address the area of interest (Corner &  Ho, 2010). These findings support the established theory of commercial businesses where the entrepreneur’s background determines the opportunity recognition and pursuit (Shane, 2000). This opportunity recognition is an aspect largely missed, and therefore silent, in the social enterprise literature as prior studies have not clarified this concept within social enterprise context (Dorado, 2006).

 

Our case study analysis showed that social entrepreneurial opportunities are based on the peculiarities of the entrepreneur and those lived experiences and values that shape the outcomes of the process. This finding is significant given that the social enterprise literature is implicit about this nature (Robinson, 2006). Effectual entrepreneurial process is actor-dependent but not outcome dependent (Corner &  Ho, 2010). The approach to enterprising observed in the Good-Faith Learning case study supports the above statement. This study found that the venture development activities are largely based on the founding entrepreneur’s life experiences and expertise. Good-Faith Learning entrepreneur’s passion and approach reflect the ‘harmoniously passionate entrepreneur” category (Stroe,  Parida &  Wincent, 2018). Such entrepreneurs engage in entrepreneurial actions because of the pleasure derived from the activities rather than external and internal pressures. Therefore, venture activities are flexible in nature and controlled by the entrepreneur. This case study has identified effectuation an example of central behaviour in a social enterprise (Stroe et al., 2018). This study further uncovered that the social entrepreneur uses “story telling” approach to connect with stakeholders. The observed entrepreneur’s actions attempted to immerse in moral values and infuse them in the social mission and the process of the enterprise. Social entrepreneurs permeate moral values in to the enterprising process in storytelling (Akemu et al., 2016). Outcomes of an enterprise is based on the entrepreneur and they endorsed them through their imagination and goals (Sarasvathy, 2001). Study findings provide additional supports to the above statement related to effectuation logic by Sarasvathy (2001).  Social entrepreneur’s social and emotional intelligence guide the choice of personnel to take the business forward (Chell, 2007).

 

Moreover, the study findings showed that the entrepreneurial actions during the pre-launch stage of this social enterprise are reflected on flexibility, experimentation and affordable loss principles. By rigorously showing how Good-Faith Learning explains effectuation theory, this study provides a richer understanding of the theory applicable in the social enterprise context. Understanding the elements of effectuation theory at behavioural level provides a clearer and in-depth understanding of a theory and allows a wider audience to interpret the essence of the theory (Akemu et al., 2016), especially the applicability in social enterprise context. Our attempt in this study to explain how main elements of effectuation theory and transforming nature of them to entrepreneurial actions makes accessible the entrepreneurship theory to practitioners.

 

Conclusion

The analysis shows how effectuation theory is consistently applied in a social enterprise context. Therefore, in addition to the widely used bricolage theory, our study has identified that effectuation theory can also be used to explain entrepreneurial actions in the social enterprise context. By studying this interface between social enterprise and entrepreneurship we expand the boundaries of entrepreneurship theories and this enriches and deepens our understanding about entrepreneurial behaviour in social contexts. Further, by focusing on the pre-launch phase of the social enterprise’s entrepreneurial actions, we show how entrepreneurs use their own discretion, lived experiences and resources to enterprising.

 

The study findings have important implications for social enterprise research. Future studies may consider investigating the dynamics of entrepreneurial processes in social enterprise context by applying different commercial entrepreneurship theories to see whether the processes are different in social contexts. In addition, those studies can extend our study by examining the effects of the effectual approach on social enterprise processes and outcomes during the post launch stage.

 

As with all studies, this study is not free from its limitations. This study uses a single case study which limits the comparison across other social enterprise contexts and transferability of the findings to other contexts.  Therefore, the findings of this study can be further confirmed and compared by using multiple case studies in future study designs to confirm transferability to other social enterprise contexts.

 

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